Fall in SME hiring could cost UK economy £6bn, report estimates
PUBLISHED: 08:50 12 June 2018 | UPDATED: 10:04 12 June 2018
A Brexit-fuelled fall in hiring among small businesses by 2022 could cost the economy more than £6bn a year, it has been claimed.
A quarterly health check of small and medium-sized businesses signals the average number of workers taken on each year looks set to plunge.
The report by lender CYBG and the Centre for Economics and Business Research (Cebr) estimates the pull back in SME hiring could reduce the annual contribution to the UK’s gross value added (GVA) to £4.8bn, compared to around £10.9bn every year between 2010 and 2017.
Gavin Opperman, group customer banking director at CYBG, said the figures were a “wake-up call”.
He said: “SME contribution cannot be underestimated.
“We must understand the pressures facing them and provide the right environment and support to help them flourish and continue being a major employer of the UK’s workforce.
“In particular, we must give our small firms the access to talent they need post-Brexit and address how these firms can be incentivised to invest in skills.”
The SME sector currently employs around 16.1 million people, roughly 60% of the UK’s total private sector employment, according to the report.
A further survey of SMEs by CYBG on hiring plans for the rest of 2018 found that 9% of firms are expecting to cut the size of their workforce over the next six months, while 6% fewer SMEs are now planning to expand their workforce than the 58% who increased staff numbers over the past six months.
Firms said a worsening outlook for the UK economy was a large factor behind the reluctance to hire, as well as rising employee costs and a reduced availability of skilled workers.
But the latest SME health check index also offered some cheer, with signs that the sector’s overall health is improving, with a reading for the first quarter of 2018 increasing by 3.4 points to 47.4 and ending five consecutive quarters of decline.
Mr Opperman said the report “does show signs of optimism”, but added that it is still “well below” previous levels.